Fascinating, sexy, improbably compelling and scathingly funny: The Big Short reviewed

A film about the financial crash that sounds boring on paper but that will fill you with righteous anger

23 January 2016

9:00 AM

23 January 2016

9:00 AM

The Big Short

15, Nationwide

The Big Short is a drama about the American financial collapse of 2008. It talks you through sub-prime mortgages, tranches, credit-default swaps, mortgage-backed securities, collateralized debt obligations …and, yes, I just bored myself to tears typing that list. I had to prop my eyes open with matchsticks typing that list. I would even propose that I was more bored typing that list than I’ve ever been in my whole life, which is saying something, as I saw Monuments Men. And, previously, I would have proposed that there is no way you could ever make any of the above fascinating or compelling or sexy, let alone scathingly funny. But The Big Short is fascinating, sexy, compelling and scathingly funny. It’s a miracle. It’s a lesson to The Revenant; a lesson that says: hey, dude, did you know that in the right hands a bear market can be more exciting than an actual bear? Did you?

Christian Bale as Michael Burry
Christian Bale as Michael Burry

It is directed and written by Adam McKay, who has made countless comedies with Will Ferrell (Anchorman, Talladega Nights, etc.) but that’s OK, because I have a fondness for Will Ferrell comedies, which are often more intelligent than they seem. This is an adaptation of the 2010 non-fiction book by Michael Lewis, which followed the handful of Wall Streeters who saw where the American economy was going, and heard the apocalyptic trumpets way before anyone else did. They’re the ones who spotted the sub-prime debt (look!; look how I’m familiar with all these words now!) and bet against the housing market — I think you’ll find this is known as ‘shorting’ — and they’re the ones who made a ton of money. They’re the winners. I suppose. Kind of. If there are any winners. There are certainly no heroes. That is made abundantly clear.

These individuals did not know each other, and never met, so we follow their stories individually. You have to know who they are, so let’s get this over with quickly. There is Michael Burry (Christian Bale), a one-eyed hedge-fund manager who has Asperger’s and is into heavy metal. There is Jared Vennett (Ryan Gosling), an ambitious young gun who can smell money on entering a room and who tips off another hedge-fund manager, Mark Baum (Steve Carell, wearing a wig of Ron Burgundy-level terribleness). And, lastly, it’s two wet-behind-the-ear chaps from Colorado (John Magaro, Finn Wittrock) who are mentored by a retired Wall Street tycoon (Brad Pitt, at his most Robert Refordish; I would even moot that Brad Pitt is better at doing mid-life Robert Redford than Robert Redford ever was).

The Big Short isn’t Wolf of Wall Street. This isn’t about the culture of excess and those cocaine-fuelled parties, although there is some of that. And this isn’t 99 Homes, as it’s not about the human cost, although there is also some of that. Instead, this wants us to understand what happened and why, which is a tall order. It knows it is a tall order. It knows it has to be outrageously entertaining, or die, and it is outrageously entertaining. It is snappy. It uses montage, irony and popular culture references. The script is great. Here is a character’s first impression of a banking conference in Las Vegas: ‘It’s like someone hit a piñata full of white people who suck at golf.’ And one conceit has Jared addressing us directly, with teasing acknowledgments along the lines of ‘Yes, we know you don’t understand it. No one does. So here’s Margot Robbie in a bubble bath to explain’, and, blow me, if we don’t then cut directly to Margot Robbie in a bubble bath, explaining sub-prime lending. So, so clever.

Steve Carell as Mark Baum
Steve Carell as Mark Baum

And it doesn’t matter if you don’t understand much — I probably didn’t understand that much — as it works anyhow, and you’ll still get, for instance, why Goldman Sachs thinks Burry is insane for wanting to bet against housing, and why they laugh at him while still being prepared to do business with him. You’ll get, too, Baum’s mounting sense of horror as he begins to realise the rating agencies are in the bank’s pockets. And you’ll get how all these complex financial tools were devised to keep the rich rich while screwing over the little guy, particularly when Baum takes a trip to Florida to check out the sub-prime market for himself, and discovers deserted properties, tenants still paying rent to landlords even though the landlords are no longer paying the mortgages, corrupt realtors signing up immigrants who don’t know what they’re signing for and also (because McKay has a terrific sense of the absurd) an alligator that will take you rather by surprise.

This is one of those films that keeps you interested in a subject you imagined you had no interest in. It is improbably compelling, while the performances (especially Bale and Carell) are smoking hot. Plus, it will fill you with a righteous anger. Although the behaviour of the banks was criminally outrageous, and led to ordinary people’s lives being ruined, only one banker ever went to prison, and now it’s back to business as usual, or so it would appear …oh God, it sounds so boring on paper, but here’s a plan: just go see it. And go see it now.

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Show comments
  • Richard Prevett

    After this positive review I am looking forward for a good laugh at the movies, as with the exception of “Joy”, most of the recent movies on offer have been very depressing and irrelevantly violent. However, if the premise of the film ignores the paramount responibility of the typical touchy-feely bad governance in the Democratic party since the 1970’s (in increasingly coercing banks to favour home ownership for minorities and sub prime borrowers), then I in turn will ignore the film’s Marxist blather and just enjoy the gags.

  • walstir

    “There is Michael Burry (Christian Bale), a one-eyed hedge-fund manager who has Asperger’s and is into heavy metal. There is Jared Vennett (Ryan Gosling), an ambitious young gun who can smell money on entering a room and who tips off another hedge-fund manager, Mark Baum (Steve Carell, wearing a wig of Ron Burgundy-level terribleness).”
    “Of the four main characters, Michael Burry (Christian Bale) is the only character whose name wasn’t changed for the movie.”

    The Jared Vennett character in the movie is based on Greg Lippmann from the book.
    The Mark Baum character in the movie is based on Steve Eisman from the book.

    If even the character names are invented; then much of the rest of the movie is also invented. The book itself is not a difficult read – it’s not like you are being asked to read “Capital in the 21st Century” or something similar; but reading anything seems to be too much to ask of the Spectator’s attention deficit disordered reviewer.

    “Does The Big Short paint an accurate picture of the 2007 financial crisis?”
    “No. At best it paints an incomplete picture of the mortgage bubble/crisis. According to Greg Ip of The Wall Street Journal, the movie puts too much of the blame on Wall Street corruption, while failing to examine the less severe but more compelling causes for the bubble. While choosing to merely criminalize the bankers, it oversimplifies what actually happened. The movie also never answers the question as to how the mortgage bubble formed.” Hint: bubbles form when masses of irrational buyers bid up prices.

    • Ann_Onymous

      Yes, but…a HUGE number of those “irrational buyers” were immigrants who had absolutely no idea how the loans they were getting even worked which, yes, one can argue makes them to blame, but as they were actively targeted and lied to by predatory lenders, those borrowers can at least claim ignorance as opposed to avarice, greed, and immorality. The same can be said of many low-income native-born or long-term citizens with the difference between that for them ignorance as a defense cannot be quite so easily excused, but even there, the reality is (and the movie illustrates this point EXTREMELY well) that the lenders, the banks, and the major financial institutions intentionally take what are at heart fairly simple concepts and complicate them so that they cannot be understood by anyone who’s not in the industry, and they do so for the purposes of taking advantage of those people.

      You’re right, the movie does oversimplify the full picture, in part because it has to – while you can explain the full picture in two hours, to do so would result in a dry, fact-based, documentary style movie for which most people wouldn’t sit through the first fifteen minutes. But if that’s a fault then, to be fair, it even oversimplifies the bank’s, mortgage industry’s, the bond rating industry’s, and the SEC’s involvement and collusion, and the pervasive fraudulent and criminal behavior that all of them did, in fact, exhibit and conduct throughout the time leading up to the financial crisis. As for most of the rest of the movie being invented, the characters actually turn to the camera a couple of times and say, “okay, this didn’t really happen – it actually happened like this,” which made the movie entertaining to me (they would also turn to the camera and, as the reviewer notes, say, “this actually happened,” so I’d say the filmmaker is pretty well covered on this point).

      And to the point that the movie never answers the question as to how the mortgage bubble formed, it does – but only very briefly, in the scene where the two mortgage brokers explain how they’re approving loans that should never be approved and then selling those loans to the banks (who in turn then wrap them up into the CDOs and mortgage-backed securities) immediately. So, you have a scenario where the entity that should be assuming the risk is guaranteed to assume no risk whatsoever, and another entity then packaging that risk and fraudulently representing it as an essentially no-risk investment. Here’s another hint – a bubble of this magnitude is formed when sellers continue to push up the price of a commodity to, not irrational buyers, but to buyers that the sellers know full well are unqualified, and to then prey on those buyers in order to continue to boost their own wealth.

      There’s a line in the movie (I don’t know if it’s in the book as I haven’t read it yet, I’ve only read two books by Mr. Lewis, both of which I loved, and I didn’t know he’d written this one but will definitely be reading it) towards the end in which one of the characters says that when the crisis is over, the blame will be put on immigrants and the poor. Continuing to repeat the misrepresentation that the bubble, and the crisis, occurred because of some irrational buyers feeds perfectly into that strategy, and ensures that this will happen again. And if you still don’t think so, bear in mind that the magnitude and scope of the impact of the crisis was far, FAR greater than the amount of money lost to the actual mortgage defaults. It was from the exponentially re-invested money that was taken by the banks in the form of the mortgage-backed securities, CDOs, synthetic CDOs, and multiple other “vehicles” that the banking and financial institutes created in order to, effectively, resell the same product multiple times. These institutions exhibited criminal, fraudulent, and idiotic behavior on a regular basis in performing these actions, and it was these actions that ultimately created the bubble and caused it to have the massive impact that it did. Irrational buyers may indeed have also exhibited idiotic behavior, but the difference is the only people hurt by their behavior (barring landlords such as the one exemplified in the movie who continued to collect rents on properties for which they were in default) were themselves. Whereas the only people who weren’t hurt by the behavior of these financial institutions were the financial institutions themselves.

      Finally, it’s not surprising that the Wall Street Journal has that criticism of the film – let’s face it, the “reporters” at the WSJ know very well on which side their bread is buttered, as well as where that butter is coming from. They’re always going to explain why anyone with this point of view is wrong. The problem is, they never truly explain why because, in the end, they know they can’t.

      • walstir

        As opposed to you, I have read the book but not seen the movie. The book itself is short and not particularly demanding – it is nothing like reading “Capital in the 21st Century” for example. The risks for someone borrowing money to buy a house and someone lending them money for the house purchase are very different. The house buyer gets 100% of any capital appreciation in the house – the lender gains nothing except for the agreed interest on the original loan no matter how much the selling price of the house changes. The downside for the borrower is that they also eat any declines in the house price until they are wiped out. If the borrower puts up 20% of the house price while the borrower puts up the other 80% and the borrower fails to repay his loan; then the lender just forecloses on the house and sells it to make themselves whole. This is the same as borrowing money on your Rolex – the pawnshop owner doesn’t care if you fail to repay or are unlikely to repay the loan since he can always sell your Rolex to recoup his loan. Repurchasers of mortgages didn’t care about the crappy quality of borrowers since the mortgages that they had purchased were protected by the value of the rising underlying assets – the houses. The houses made the loans good regardless of the quality of the borrowers. The mistake that repurchasers of mortgages made was assuming that there would be no widespread and longlasting decline in the value of housing stock in general – not that the quality of the borrowers was substandard.

        • Ann_Onymous

          Completely agree that the risk a borrower takes and the risk a lender takes are two different risks. However, I think that describing the payout to the lender as nothing except for the agreed interest on the original loan downplays the amount of the payout lenders get. As an example, I borrowed approximately $270K to purchase a $300K house (yes, I was a “sub-prime” borrower, but in my case my credit union actually presented the sub-prime loan as an option, explaining that it had the potential to save me some money if I chose to re-fi later if/when there was more equity in the house. I didn’t have to accept a sub-prime as my only option, as my credit rating was excellent and I had 20% down had I chosen to take a standard loan). I’m currently paying about $2K a month in interest which, after 30 years, will be a payout of $720K – well over a 100% return for the lender.

          But, to be fair, that’s a bit of an aside – in the end, your core point that in any loan both the borrower and the lender assume risk, but that those risks are different, is absolutely correct. Your point regarding the mistake that mortgage re-purchasers made is also correct, to a point, but it leaves out another aspect of their behavior which was not a mistake, but was at best malfeasance and at worst criminal. I’m speaking of the CDOs, and the overt decision to package mortgages that were at high to immediate risk of default, and to then market and sell them as high rated bonds – and, yes, that was also the fault of the bond ratings agencies, who colluded with them to do this, and then used the excuse that if they didn’t do it, the other agencies would. Had the mistake the re-purchasers made only been the foolish belief that housing values couldn’t possible be the result of a bubble (which, by the way, MANY other financial experts besides the ones in the movie saw coming. If you haven’t already read it, I would highly recommend All The Devils are Here, by Bethany McLean and Joseph Nocera which includes stories of other “small” investment managers who also understood what was happening), then it would have been only that; a foolish mistake committed by “experts” who should have known better. But the repackaging actions were, in my opinion, criminal, and because they created exponential reinvestment “opportunities” on the same securities, a major, if not the major, contributor to the widespread scale of impact that the crash had around the world.

          That said, I do have to say that one point the movie did not touch on was exactly why so many of these so-called experts thought that there was no bubble and therefore there couldn’t be crash was because of the quants hired by the major investment banks. I’m pretty sure that you’re already very familiar with what a quant is, so I won’t bother explaining that here, but if I’m incorrect, feel free to correct me and I can explain what they do. That aside, the quants continued to revise their financial/economic models to “prove” that it was in fact possible to increase the risk of the investment vehicles that the investment houses were selling, without substantially exposing those houses to higher risk of default or loss. I don’t know anywhere near enough about the mechanics of how quants do what they do to be able to understand, let alone explain, how anyone could possibly come to such a conclusion, but apparently this was quite widespread.

          With respect to your comment regarding the depth of the book, I can say that that is also true of the two that I’ve read – they are not particularly demanding, and I have certainly not formulated my perspective of the financial crash based just on those readings. But I do appreciate that Lewis takes what are considered to be complex concepts and breaks them down to simpler, more understandable ones because, for me, one of the key points I took away from his books was that what the financial institutions are doing is not actually complex, they only obfuscate it so that they can then make it seem as if they are complex and deeply technical actions, which the average person could never hope to understand – thereby allowing them to take advantage of the average person in the course of business. Liar’s Poker really underscores his point that in actuality, the average investment broker knows almost nothing more than the average person about what the stock market in general, and any stock in particular, is actually going to do, but they DO know about how to package stock activity in a way that will guarantee they get commissions, regardless of whether or not the customer makes gains or losses.

          And, finally, I would like to thank you – all too often, when two people don’t agree on a financial or political discussion on the Internet, it deteriorates almost immediately into a flame war that consists of nothing but personal attacks. I usually don’t bother saying as much as I said in my first reply because of my experiences with that, but your post seemed pretty thoughtful, so I gave it a shot. I was very pleasantly surprised with your reply, in that it was respectful and not the typical Internet idiocy. That said, while we may never come to an agreement on what we perceive to be the root cause(s) of the crash, I am always happy to have a respectful discussion with someone who has something to say. Far more often than not, I’ve found I learn something that makes me shift my perspective when that happens, so I tip my Internet hat to you and thank you for your comments.

          • walstir

            “I’m speaking of the CDOs, and the overt decision to package mortgages that were at high to immediate risk of default, and to then market and sell them as high rated bonds”…..”they are complex and deeply technical actions, which the average person could never hope to understand – thereby allowing them to take advantage of the average person in the course of business.”

            The “average person in the course of business” doesn’t need to understand CDOs because they never buy CDOs – these are hugely expensive assets that are sold exclusively to people who officially qualify as “sophisticated investors” as described here:


            “Certain assumptions are made about sophisticated investors: that they can hold their investments indefinitely (the funds do not need to be liquidated for cash needs), and they can assume a total loss of investment principal without causing severe damage to their overall net worth.”

            You are also incorrect about how mortgage bonds are rated – an entire bond is not given a high rating. Here is the explanation of tranches in subprime mortgage bonds from the Michael Lewis book “The Big Short” itself:


            “A mortgage bond wasn’t a single giant loan for an explicit fixed term. A mortgage bond was a claim on the cash flows from a pool of thousands of individual home mortgages. These cash flows were always problematic, as the borrowers had the right to pay off any time they pleased. This was the single biggest reason that bond investors initially had been reluctant to invest in home mortgage loans: Mortgage borrowers typically repaid their loans only when interest rates fell, and they could refinance more cheaply, leaving the owner of a mortgage bond holding a pile of cash, to invest at lower interest rates. The investor in home loans didn’t know how long his investment would last, only that he would get his money back when he least wanted it. To limit this uncertainty, the people I’d worked with at Salomon Brothers, who created the mortgage bond market, had come up with a clever solution. They took giant pools of home loans and carved up the payments made by homeowners into pieces, called tranches. The buyer of the first tranche was like the owner of the ground floor in a flood: He got hit with the first wave of mortgage prepayments. In exchange, he received a higher interest rate. The buyer of the second tranche—the second story of the skyscraper—took the next wave of prepayments and in exchange received the second highest interest rate, and so on. The investor in the top floor of the building received the lowest rate of interest but had the greatest assurance that his investment wouldn’t end before he wanted it to.”

            “The big fear of the 1980s mortgage bond investor was that he would be repaid too quickly, not that he would fail to be repaid at all. The pool of loans underlying the mortgage bond conformed to the standards, in their size and the credit quality of the borrowers, set by one of several government agencies: Freddie Mac, Fannie Mae, and Ginnie Mae. The loans carried, in effect, government guarantees; if the homeowners defaulted, the government paid off their debts. When Steve Eisman stumbled into this new, rapidly growing industry of specialty finance, the mortgage bond was about to be put to a new use: making loans that did not qualify for government guarantees. The purpose was to extend credit to less and less creditworthy homeowners, not so that they might buy a house but so that they could cash out whatever equity they had in the house they already owned.”

            “The mortgage bonds created from subprime home loans extended the logic invented to address the problem of early repayment to cope with the problem of no repayment at all. The investor in the first floor, or tranche, would be exposed not to prepayments but to actual losses. He took the first losses until his investment was entirely wiped out, whereupon the losses hit the guy on the second floor. And so on.” The tranches held by investors on the top floor were the safest based on historical default rates and could be rated AAA; while the lower tranches would not receive AAA ratings.

          • walstir

            “I’m currently paying about $2K a month in interest which, after 30 years, will be a payout of $720K – well over a 100% return for the lender.”

            Firstly, at an average annual 2% inflation rate, each dollar loses half its purchasing power every 33 years; so the last dollar that you repay the lender is actually only slightly more than half a current dollar in purchasing power. Secondly, suppose that whoever lent you the money had purchased the house themselves and rented the house to you. At the end of 30 years they would still own the house as well as receiving an inflation adjusted rent from you for 30 years – that is what the lender is giving up in order to lend you the money.

          • walstir

            We are in agreement on the intemperate tone of many internet postings. As WB Yeats noted a century ago:
            “The best lack all conviction, while the worst are full of passionate intensity.”

  • walstir

    “This is an adaptation of the 2010 non-fiction book by Michael Lewis, which followed the handful of Wall Streeters who saw where the American economy was going, and heard the apocalyptic trumpets way before anyone else did.”

    Way before? From the book:

    “On March 19, 2005, alone in his office with the door closed and the shades pulled down, reading an abstruse textbook on credit derivatives, Michael Burry got an idea: credit-default swaps on subprime-mortgage bonds.”…”The credit-default swap would solve the single biggest problem with Mike Burry’s big idea: timing. The subprime-mortgage loans being made in early 2005 were, he felt, almost certain to go bad. But, as their interest rates were set artificially low and didn’t reset for two years, it would be two years before that happened. Subprime mortgages almost always bore floating interest rates, but most of them came with a fixed, two-year “teaser” rate. A mortgage created in early 2005 might have a two-year “fixed” rate of 6 percent that, in 2007, would jump to 11 percent and provoke a wave of defaults. The faint ticking sound of these loans would grow louder with time, until eventually a lot of people would suspect, as he suspected, that they were bombs. Once that happened, no one would be willing to sell insurance on subprime-mortgage bonds. He needed to lay his chips on the table now and wait for the casino to wake up and change the odds of the game. A credit-default swap on a 30-year subprime-mortgage bond was a bet designed to last for 30 years, in theory. He figured that it would take only three to pay off.”

    Here is a link to the cover story (illustrated by cover art showing a crashing brick labelled “Housing” dropping from the sky) which appeared in the June 18, 2005 issue of “The Economist” (average weekly circulation 1.5 million copies, about half of which are sold in the United States):

    “The global housing boom – In come the waves”


    “The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops”…”Even a modest weakening of house prices in America would hurt consumer spending, because homeowners have been cashing out their capital gains at a record pace. Goldman Sachs estimates that total housing-equity withdrawal rose to 7.4% of personal disposable income in 2004. If prices stop rising, this “income” from capital gains will vanish. The housing market has played such a big role in propping up America’s economy that a sharp slowdown in house prices is likely to have severe consequences.” “Not only does this dwarf any previous house-price boom, it is larger than the global stock market bubble in the late 1990s (an increase over five years of 80% of GDP) or America’s stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history.”

  • walstir

    Fascinating yes; but sexy?

    Here is the central character Michael Burry described and describing himself in “The Big Short”:

    “My nature is not to have friends,” he said. “I’m happy in my own head.” Somehow he’d married twice. His first wife was a woman of Korean descent who wound up living in a different city (“She often complained that I appeared to like the idea of a relationship more than living the actual relationship”) and his second, to whom he was still married, was a Vietnamese-American woman he’d met on In his profile, he described himself frankly as “a medical resident with only one eye, an awkward social manner, and $145,000 in student loans.”

    • Jackthesmilingblack

      Not into white women, huh?

  • Count Spencer

    Why do westerners watch films that glorify these parasitic worms thieving our wealth.

    • MenAreLikeWine

      I take it you haven’t seen the film, or read the review?

  • Johnnydub

    As other sites have pointed out there’s only one teeny weeny problem with the film. It utterly omits any mention of Clinton’s legislation – The Community Reinvestment Act.

    You know the one – it used to law to force Fannie Mae and Freddy Mac to lend to ethnic borrowers with poor credit.

    Otherwise known as the root cause of the whole catastrophe.

  • jim

    Twinky cast…marxist politics…It had better be funny.

    • commenteer

      Actually, it’s terrific. For once I agree with Deborah Ross. Do go.

  • ant

    Using celebrities to explain complex financial concepts is this film’s genius. Should be shown in schools. And Goldman Sachs? Where’s ISIS when you need them…

  • Jackthesmilingblack

    Saw “The Big Short” last week. Good movie, albeit a little difficult to follow. Now I know where the expression “Banksters” came from.

  • JohnJ

    Interesting how similar aspects of the movie are to the denial of Islam as being a major problem around the world. While it is obvious to anyone who bothers to read the Koran, Sunna and follow the innumerable Islamist groups, the Government, media, celebs, police bosses, Universities, faux intellectuals refuse to see it. The smiling complicit idiots of the film are paralleled every night on the news. It is an impending disaster now spread into almost all counties. The Islamic State and the like have told us again and again that they are at war with all of us and slaughter/rape/pillage accordingly. But still we hear “It’s nothing to do with Islam”. While more fighters arrive, IS take other areas, new franchises pop up (Philippines, Malaysia, Indonesia), we are told that we are winning. Delusional.

  • Alex Moss

    “did you know that in the right hands a bear market can be more exciting than an actual bear?” I see that Andrew O’Neil edited this review 😉

  • Adam Carter

    Christian Bale is a fine actor.

  • Gerry Flower

    Utterly compelling movie. One of those all too rare instances where it ALL comes together – writing, directing, acting, editing. Riveting!